Mutual Funds see opportunity in stock market fall

Mumbai: Equity fund managers, who were on a slow mode in stock market, plan a comeback, mainly in energy and financial sectors, says a poll conducted by a news agency from February 19 to 25.

Most of participants (seven out of 10) in the Reuters Asset Allocation Poll said that the benchmark index was not likely to show negative return in the next three months. "Valuations are looking quite attractive after the recent decline in the stock market. The corporate results of third quarter have been robust enough to indicate that the growth rate would be in the range of 20 to 25 percent," said R Rajagopal, who oversees about Rs 3000 crore as chief investment officer for DBS Cholamandalam Asset Management.

On Tuesday, India's main index was down about 16 percent from its life-time high, sliding more than 10 percent intra-day for two successive days in January, caused by fear of a global downturn. Indian funds invested about 91 per cent of their assets in stocks at January-end, down from 94 percent in December. Five of the 10 respondents said they were likely to raise their equity exposure in the next three months.

In January, Equity funds raised exposure to financial services companies to 16.13 percent of equity assets. It was 13.59 percent a month earlier. Six of the ten respondents said they would add to their positions. A majority of the stock fund managers are also likely to invest more into the energy sector, which cornered about a tenth of their equity assets by the end of January.

"Investors are playing the consumption story of India that would ultimately benefit the financial services sector. Moreover, rising expenditure on infrastructure sector would improve loan growth of banks, boosting earnings," said Gopal Agrawal, Head of equity at Mirae Asset Global Investment Management (India).